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A meeting of the Executive Comndttee of the Federal Reserve Board

was held in Washington on Thursday, January 26, 1933, at 12:05 p. in.

PRESENT: Governor MeyerMr. Hamlinlir. Miller

Mr. Morrill, SecretaryMr. McClelland, Assistant SecretaryMr. Harrison, Assistant to the Governor.

The Committee considered and acted upon the following matters:

Telegrams dated January 25, 1933, from the Chairmen of the Federal

Reserve Bari-8 of Boston and Kansas City advising that at meetings of the

boards of director's on that date no changes were made in the banks' existing

schedules of rates of discount and purchase.

Without objection, noted with approval.

Telegraphic reply on January 25, 1933, approved by five members of

the Board, to a telegram of that date from Deputy Governor Rounds of the

2ederal Reserve Bank of Mew York requesting authority for a further advance

in accordance with the provisions of section 10(b) of the Federal Reserve

Act to the Pelham National Bank, Pelham, New York, in the amount of 45,000,

tor a period of ninety days, with interest at the rate of 5'7, per annum, and

04 the security of municipal obligations with a margin of at least 25-;;

Deputy Governor Rounds stating that the bank is still experiencing with-

resulting from the closing of the First National Bank in Mamaroneck,

elld is in need of additional funds. The reply stated that the Board author-

izes the advance subject to the terms and conditions recommended.

Approved.

Telegraphic reply on January 25, 1933, approved by five members of

the Board, to a telegram of that date from Governor Calkins of the Federal

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Reserve Bank of San Francisco requesting authority for an advance in

accordance with the provisions of section 10(1)) of the Federal Reserve Act

to the Capital National Bank, Sacramento, California, in the amount of

-$500,000, with interest at the rate of 5,; per annum, payable on demand, and

on the security of bonds and customers' notes with a total value of ,',969,000,

Governor Calkins stating that the advance is desired to met an active run

on the bank resulting from the suspension of the California National Bank,

the California Trust and Savings Bank, both of Sacramento, and five banks

in neighboring towns. The telegram also stated that the bank has lost

4,000,000 in deposits since December 31, 1932, and, although the situation

is well in hand, the Federal Reserve Bank of San Francisco expects to re-

quest authority to make advances to the Capital National Bank under section

10(3) up to a total of 4,000,000 as a Precautionary measure. The reply

stated that the Board authorizes the advance in the amount of .„;500,000

s"ject to the terms and conditions recommended, and that in the event the

4dvance is not repaid nor demand for payment made within 90 days from

J'alluary 25, 1933, the matter should again be brought to the Board's

attention.

Approved.

At this point Er. Wyatt, General Counsel, joined the meeting.

Letter dated January 25, 1933, from the Federal Reserve Agent at

Chicago reporting that it was discovered on January 18, 1933, that Yr.

ID. A. Jones, Assistant Deputy Governor in charge of the Fiscal Agency

I3ePartment of the Federal reserve bank, had been participating in profits

Icil44s through manipulations, conducted by himself and a junior officer of

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the Continental-Illinois National Bank and Trust Company of Chicago, in

connection with the redemption and issue of Government securities through

the Fiscal Agency Departnent of the Federal reserve bank; that the resig-

nation of Er. Jones was imediately requested and accepted by the executive

committee of the Federal reserve bank on January 20; that a complete audit

of the Fiscal Agency Department is now under way and it would appear that

the bank has suffered no loss as a result of the transactions; that the

platter was discussed with counsel, particularly with respect to whether it

is of a character which should be reported to the Department of Justice;

and that it was thought advisable for Er. Charles B. Dunn, of counsel, to

gO to Washington to discuss the matter with the Board's Counsel.

Er. Eorrill stated that'll'. Dunn is in Washington today and has

discussed the situation with him and Er. Wyatt, and that they feel that,

before any other action is taken a complete and thorough investigation

Should be conducted at the Federal Reserve Bank of Chicago and the

Continental-Illinois National Bank and Trust Company and in any other

direction which may seem desirable after further information has been

developed. Ur. Lorrill also suggested that Kr. Paulger, Chief of the

Division of Examinations, who is in Kansas City today, might be able to

return via Chicago to Washington for the purpose of making such prelimin-

exY investigation of the matter as seems to him. to be desirable.

At the conclusion of the ensuing dis-cussion, the Secretary of the Board was re-

quested to communicate with Mr. Paulger andto request him, if possible, to stop off atChicago, on his way to Washington, for thepurpose indicated.

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Letter dated January 24 from the Governor of the Federal Reserve

Bank of New York, replying to the Board's letter of January 19, 1933, with

regard to a proposed trip of Governor Harrison to Europe in the near

future. The reply reviewed the consideration Which had been given by

Governor Harrison and informally by sane of his directors to such a trip

and stated that up to the tire the reply was made the directors had made

nO definite decision as to whether the advantages of Governor Harrison's

going to Europe in the near future outweigh the possible disadvantages.

The Secretary was requested, in acknowledging

the above letter, to state that the Board assumes that

if and when the directors of the New York bank reach

any conclusion in the matter referred to, GovernorHarrison will communicate with the Board further.

Reference was made to the discussion Which took place at the meeting

On 'J'anuary 6, 1933, when the budget of the Board for the year 1933 was

approved with no changes in salary rates from those Previously in effect,

but With the understanding that further consideration would be given to

certain

because

cases involving unusual circumstances. It was pointed out that

of the deaths during 1932 of Lessrs. VI. H. Imlay and C. W. Hanford,

who were not replaced in the organization, it became necessary for Hr.

J's C. Uoell to assume additional responsibilities and duties. It was also

Pointed out that because of the resignation in November, 1932, of Mr. R. H.

13rett, Federal reserve examiner, who had been the senior field examiner

Under Hr. Drinnen, it became necessary for Mr. R. F. Leonard to assume

adaitional responsibilities and duties as the senior member of the field

l'c3rce under Hr. Drinnen's direction. In view of the circumstances of each

°I' these cases which, in the opinion of the Board warranted special con-

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sideration, the salary of Mr. Noell as Assistant Secretary and Fiscal Agent

was fixed at the rate of :37,100 per annum and that of Fr. Leonard as Fed-

eral reserve examiner at the rate of :A,500 per annum, both effective on

this date.

Reports of Standing Committee dated January 25, 1933 recommending

approval of the following changes in stock at Federal reserve banks:

APplications for SURRENDER of Stock: Shares District lib. 4. First National Bank, Dayton, Pennsylvania.

(Decrease in surplus) 15Peoples-Pittsburgh Trust Company, Pittsburgh, Pa.

(Decrease in surplus) 1,694 1,709

District No. 11. Texas Bank Trust Company, Brownsville, Texas.

(Insolvent) 79 79Total 1,788

Approved.

Report of Standing Committee dated Tanuary 24, 1933, recommending

aPproval of the following Clayton Act application:

Er. Barton 2. Turnbull, far permission to serve at the sametilae as director of the Dunbar National Bank of New York, NewYork, and as director and officer of the Summit Trust Company ofSummit, New Jersey.

Approved.

Thereupon the meeting adjourned.

APProved:

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